EMI Group Ltd is reportedly in discussion with two rivals to license its distribution rights in order to raise about £200m as the deadline for debt payment approaches today.

The last minute effort by the company to reach a deal before it has to pay private equity owner's £3.2bn in loans. EMI rivals, Universal Music and Sony Music are interested in attaining rights for selling content by EMI artists in Canada, the US and Latin America.

All three parties did not comment on the reports of a possible agreement. There are many uncertainties in the ongoing negotiations including financial arrangements.

The company intends to sign a deal by today so that it can avoid a debt default. The company must submit data for a quarterly test under the terms and conditions of a loan taken by Terra Firma from the Citigroup at the time of acquiring the group for £4.2 billion.

The holding company of EMI, Maltby Capital expects the company to fail the test. It tried to raise £120m from the investors of Terra Firma to make up the short shortfall before the deadline approaches.

The lender, Citigroup could block the deal however; the deal could bring more value to the sale of the company as its distribution will be handled through a bigger rival who will be able to negotiate a better deal with retailers.

EMI is reported asking its rivals interested it utilizing its rights to pay as much of the amount as soon as possible so that it can show improved figures before the quarterly test. The test will measure multiple of debt to earnings before interest, tax, depreciation and amortisation.

The deal could also face challenges from the regulators as it would substantially increase the market reach of one of two biggest players in the market. It would also affect Warner Music who would face stiff competition form the bigger rivals.